Rising geopolitical tensions and disruptions from the pandemic have pushed developing nations like India to prioritise energy security. However, with India's G20 presidency and commitment to net zero goals, the newly formed government faces the challenging task of balancing these critical priorities, according to experts.
India is the world's third-largest emitter of carbon dioxide after China and the US and has a net zero target by 2070. By 2030, it aims to have half of its power capacity mix to come from non-fossil fuels.
"The ultimate challenge for India’s energy security is the same as for its energy transition: scaling up fast enough. Having sufficient energy available at an accessible price is already challenging before adding in conditional factors like security and decarbonisation," Seattle-based non-profit research institution National Bureau of Asian Research (NBR) said in a report last year.
The International Energy Agency estimates that India will need to invest $160 billion a year in its energy transition between now and 2030.
"The evolving energy landscape, coupled with the turbulent geopolitical situation and heightened attention on India as a hub for oil demand expansion could throw up challenges for the new government as it tries to ensure affordable energy and energy security, while working toward meeting its climate pledge," according to a S&P Global Commodity Insights report.
Commodity Insights expects India's oil demand to grow as high as 5.54 million b/d in 2030, from about 4.5 million b/d in 2023.
As of March 31, 2024, India's total renewable energy capacity stood at 144 GW, including large hydro capacity. The country aims for 500 GW of renewable energy installed capacity by 2030.
"India's GHG (Greenhouse gas) emissions per capita is lower than China, Japan. The challenge for the new government would be to keep the per capita carbon emissions lower while ensuring there is enough supply of power," said Sankar Chakraborti, CEO at Acuité Ratings & Research. He further added that the government should focus on making more investments and resources available for the renewable energy ramp up.
Policy and regulatory reforms are needed in the power sector to accelerate the use of renewable energy, according to a a research report by TERI (The Energy and Resources Institute) and Shell Group India. The report added that reforms are needed to compensate flexibility technologies such as energy storage, demand-side response and gas-fired generation.
India's power sector is the largest source of greenhouse gas emissions. Although the share of coal has dipped below 50 per cent, it still remains a dominant source for electricity generation.
A recent report by IEEFA and JMK Research has recommended slashing the Goods and Services Tax (GST) on hydropower and wind projects to ease the strain on developers' balance sheets and increase affordability.
The International Institute for Sustainable Development (IISD) report, "Mapping India's Energy Policy: A Decade in Action," points out that less than 10 percent of energy subsidies were allocated to clean energy in FY 2023. Meanwhile, coal, oil, and gas subsidies accounted for about 40 percent, with a significant portion directed towards electricity subsidies, particularly for agriculture.
According to research reports, India's eagerness to reduce reliance on imported fossil fuels is a long-term ambition as the country still lacks technological feasibility, skilled workforce and supply chains for clean energy technologies.
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